Tax Return:: Is Holding a Private Health Insurance Policy Useful When Lodging Your Tax Return?

Hello, this is your tax and super specialist, P&C Tax Professionals.

Holding a private health insurance policy may help you to reduce the tax payable on your taxable income. However, you must first meet the eligibility criteria in order to receive what is known as the private health insurance offset. In today’s blog post, we will go through how a private health insurance policy could be beneficial for your tax return.

When you lodge your tax return, if you are an Australian resident for tax purposes you must pay for the Medicare levy which is 2% of your taxable income. Unless you are eligible for a reduction or an exemption, the Medicare levy amount is on top of the tax you would have to pay on your taxable income.

Besides the Medicare levy, you may also be charged the Medicare levy surcharge (MLS) if the following applies to you:

> you, your spouse or your dependent children did not hold an appropriate level of private patient hospital cover, AND

> your income is above the given threshold for singles or families

<Eligibility for the Private Health Insurance Rebate or Offset>

In order to claim a rebate or tax offset for your private health insurance, you must have held a private health insurance policy during the financial year. Your rebate or tax offset amount will be income tested and will ultimately depend on your eligibility.

Your eligibility to claim such a rebate or offset will be based on:

> the age of the oldest person that is listed on your policy

> your single or family income for Medicare levy surcharge purposes

If you happen to have a high income, the private health insurance rebate you would be able to receive will either be reduced or you may not be able to receive any of the rebate at all if your income exceeds $140,001 for singles or $280,001 for families.

<How to Claim the Private Health Insurance Rebate>

You can claim for your private health insurance rebate through two options:

> as a premium reduction which will reduce the policy price that your insurer normally charges you (this means you will pay less upfront to your insurer)

> as a refundable tax offset upon lodging your tax return

You will be eligible to claim for the private health insurance rebate as an offset on your tax return as long as you have not claimed any or all of the rebate from your insurer in the form of a premium reduction. If you have already claimed your private health insurance rebate as a premium reduction, you will not be subject to the private health insurance offset when you lodge your tax return.

That’s all for today but if you have any further enquiries or general questions, please reach out to us through our official Facebook Page (P&C Tax Professionals – Australia) or send them to our email address at pnctax@naver.com.

Thank you and bye for now!